equity and trusts in australia c e dal pont professor

EQUITY AND TRUSTS

IN AUSTRALIA

C E DAL PONT Professor Faculty of Law, University of Tasmania

SEVENTH EDITION

LAWBOOK CO 2019

TABLE OF CONTENTS

Preface v Table of Cases xxv Table of Statutes clxi List of Abbreviations clxxxvii

Prologue - Nature of Equity 1 [P.05] HISTORICAL BACKGROUND 1

[P.10] Early development of equity 1 [R30] Transformation of equity 3 [P.35] Equity in Australian courts 5

[P.40] THE FUSION DEBATE 6 [P.40] What is meant by "fusion"? 6 [P.45] Remedial fusion 8

[P.70] MAXIMS OF EQUITY 14 [P.75] A person who seeks equity must do equity 15 [P.80] A person who comes to equity must come with clean hands 16 [P.85] Equity will not suffer a wrong without a remedy 16 [P.90] Equity will not allow Statute to be used as an Instrument of fraud 16 [P.95] Equity looks to intent rather than form 17 [P.100] Equity assists the diligent and not the tardy 18 [P.105] Equity acts in personam 18 [P. 110] Equity is equality 18 [P. 115] Equity will not perfect an imperfect gift 19 [P.120] Equity will not assist a volunteer ! 20 [P.125] Equity considers as done that which ought to have been done 20

[P.130] THEMES 21 [P.135] Equity's role in preventing or rectifying abuses of trust 21 [P.150] Equity's role in preventing or rectifying unconscionable conduct 23 [P.165] Equity's role in preventing or rectifying unfair outcomes 26 [P.170] Equity's approach to remedies 26

PART I: EQUITABLE INTERESTS

Chapter 1: Nature and Creation of Equitable Interests 33 [1.05] NATURE OF AN EQUITABLE INTEREST 33

[1.05] Hallmarks of an equitable interest in property 33 [1.20] Scope of an equitable interest in property 36 [1.25] Equitable interests compared to legal interests 37

[1.35] CREATION OF EQUITABLE INTERESTS IN PROPERTY 38 [1.45] Equitable interests created pursuant to intention 39 [1.85] Equitable interests arising by implication of law 44 [1.120] Equitable interests arising by Operation of law 48

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Equity and Trusts in Australia

[1.145] TYPES OF EQUITABLE INTERESTS IN PROPERTY 50 [1.145] Trust 50 [1.150] Equitable charge or mortgage 50 [1.160] Equitable lien 51 [1.165] Equitable lease 53

Chapter 2: Equitable Priorities 55 [2.10] COMPETING EQUITABLE INTERESTS 55

[2.10] General principle 55 [2.20] Relevant factors in ascertaining the better equity 57 [2.75] Priorities in relation to trusts 64 [2.80] Tacking 64 [2.105] Equitable priorities and mere equities 66

[2.125] EQUITABLE ESTATE AND SUBSEQUENT LEGAL ESTATE 70 [2.125] General principle 70 [2.135] Qualifications to the general principle 70

[2.140] LEGAL ESTATE AND SUBSEQUENT EQUITABLE ESTATE 71

Chapter 3: Assignments in Equity 73 [3.05] CONCEPT OF AN ASSIGNMENT 73

[3.10] Historical background to assignments of choses in action 73 [3.20] Disposal and transfer of equitable interests outside of an assignment .... 75

[3.25] STATUTORY ASSIGNMENTS 75 [3.25] Statutory scheme 75 [3.35] Principal requirements 76

[3.40] EQUITABLE ASSIGNMENTS 79 [3.45] Requirement of an intention to assign 80 [3.55] Relevance of notice 82 [3.80] Equitable assignment of legal choses 84 [3.95] Equitable assignment of equitable choses 86

[3.120] ENTITLEMENTS OF AN EQUITABLE ASSIGNEE 88 [3.120] Standing 88 [3.140] Assignor as trustee 90

[3.155] IMPACT OF CONTRACTUAL NON-ASSIGNABILITY CLAUSES 92

PART II: RELATIONSHIPS OF TRUST

Chapter 4: Fiduciary Relation: 97 [4.05] FIDUCIARY DUTIES 97

[4.10] Nature of fiduciary duties 97 [4.35] Strictness of fiduciary duties 102 [4.40] Reasons for seeking to establish breach of fiduciary duty 103 [4.45] Duration of fiduciary duties 104

[4.50] CHARACTERISTICS OF RELATIONSHIPS THAT ATTRACT FIDUCIARY DUTIES 105 [4.50] A fiduciary principle? 105

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[4.55] Trust and confidence? 105 [4.60] Undertaking to act in the interests of another? 106 [4.65] Disadvantage, vulnerability and unequal bargaining power? 107 [4.70] Synthesis 108 [4.75] Categorising relationships that give rise to fiduciary duties 110

[4.80] TRUSTEE AND BENEFICIARY 110 [4.85] DIRECTOR AND COMPANY .:. 111

[4.90] Corporate business opportunities 112 [4.120] Multiple directorships 117 [4.130] Director having an interest in, and transacting with,

the Company 119 [4.135] LAWYER AND CLIENT 120

[4.140] Application of the "no-conflict" duty 120 [4.160] Application of the "no-profit" duty 122

[4.170] AGENT AND PRINCIPAL 124 [4.175] Real estate agents 124

[4.190] PARTNERS 127 [4.190] Nature of partnership duties 127 [4.200] Fiduciary duties prior to the execution of a partnership agreement 127 [4.205] Fiduciary duties following dissolution of partnership 128 [4.210] Fiduciary duties following death of a partner 129

[4.215] JOINT VENTURERS 129 [4.235] FINANCIAL ADVISER AND CLIENT 133 [4.250] BANKER AND CUSTOMER 135 [4.265] COMMERCIAL TRANSACTIONS GENERALLY 136 [4.285] EMPLOYER AND EMPLOYEE 139

[4.285] Employees' contractual duty of fidelity compared to fiduciary duties 139

[4.290] Employees' duty of confidentiality compared to fiduciary duties 140 [4.295] Employers' duty 141

[4.300] DOCTOR AND PATIENT 142 [4.305] SOCIAL AND FAMILIAL RELATIONSHIPS 143

[4.305] Child abuse and fiduciary duties 143 [4.315] Guardian and ward 145

[4.320] DEFENCES TO BREACH OF FIDUCIARY DUTY 146 [4.325] REMEDIES FOR BREACH OF FIDUCIARY DUTY 146

Chapter 5: Government and the Public Trust 149 [5.05] CONCEPTS OF TRUST IN PUBLIC LAW 149

[5.10] Fiduciary theory and the government-citizen relationship 150 [5.15] Trust analogy 150

[5.20] IMPACT OF TRUST CONCEPTS ON PUBLIC LAW 151 [5.25] Trust at an individual level 152 [5.30] Trust on a collective level 153 [5.35] Curial application of trust concepts in public law —

fiduciary duties to indigenous persons 153

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Chapter 6: Confidential Information 159 [6.05] NATURE AND JURISDICTIONAL BASIS 159

[6.10] Jurisdiction 159 [6.20] Elements 160

[6.25] CONFIDENTIALITY 161 [6.30] Commercial or technical Information 162 [6.90] Personal confidences 171 [6.155] Governmental Information 180

[6.170] CONFIDENTIAL CIRCUMSTANCES 183 [6.170] Relevance of confidential circumstances 183 [6.175] Objective test 183 [6.180] Information communicated within a contractual relationship 184 [6.190] Information disclosed to a governmental body 186 [6.195] Information collected by law enforcement officers 187

[6.205] BREACH OF DUTY 188 [6.205] Standing to enforce confidentiality 188 [6.215] Need for specificity in identifying confidential Information 190 [6.220] Inferring a breach of confidence 191 [6.230] Need for proof of detriment? 192 [6.240] Receipt of confidential Information by tbird parties 193

[6.265] INFORMATION GAINED BY REPREHENSIBLE MEANS 197 [6.280] PUBLIC INTEREST DEFENCE 199

[6.285] Public interest and governmental Information 200 [6.290] Disclosure of iniquity 201

[6.315] REMEDIES FOR BREACH OF CONFIDENCE 204 [6.320] Injunction 205 [6.330] Account of profits 206 [6.340] Equitable damages 207 [6.370] Delivery up 212 [6.375] Constructive trust 213

Chapter 7: Undue Influence 217 [7.05] NATURE OF UNDUE INFLUENCE 217

[7.05] Definition 217 [7.10] Distinguished from unconscionable dealing 218 [7.15] Compared to undue influence at law ("testamentary undue

influence") 218 [7.20] TYPES OF UNDUE INFLUENCE 219

[7.25] Presumed undue influence 219 [7.45] Actual undue influence 223

[7.50] RELEVANT EVIDENCE 224 [7.55] Independent advice 225 [7.70] Clear Intention to enter transaction sought to be impugned 228 [7.75] Improvidence of transaction 229 [7.85] Transaction not tbe proximale result of tbe influence 231

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[7.90] UNDUEINFLUENCE AND PARTICULAR RELATIONSHIPS 232 [7.90] Undue influence by husband over wife 232 [7.100] The relationship between man and woman to whom he is

affianced (?) 234 [7.105] Other personal relationships 234 [7.110] Intra-family undue influence 235 [7.140] Undue influence and commercial relationships 239

[7.160] UNDUE INFLUENCE AND THIRD PARTIES 240 [7.165] Agency 242 [7.170] Notice 243 [7.210] Unconscionable conduct by creditor 251

[7.270] DEFENCES 262 [7.280] REMEDIES 263

PART III: UNCONSCIONABLE CONDUCT

Chapter 8: Fraud and Mistake 269 [8.05] FRAUD IN EQUITY 269 [8.10] PRESSURE IN EQUITY 270

[8.10] Common law duress distinguished from pressure in equity 270 [8.15] Scope of the pressure doctrine in equity 270 [8.25] Onus of proof and relief 272 [8.30] A modern Substantive doctrine of duress? 273

[8.35] EQUITABLE FRAUD AND STATUTE 273 [8.50] FRAUD ON A POWER 275

[8.55] Relevance of intention 275 [8.70] Anticipation or knowledge of the conduct of object(s)

as intention 276 [8.75] Severance of an excessive exercise of a power 277 [8.85] Default, revocation and release of powers 277

[8.90] INNOCENT MISREPRESENTATION 278 [8.90] Equitable relief 278 [8.95] Statutory intervention — misleading and deceptive conduct 279

[8.100] MISTAKE 280 [8.105] Recovery of amounts paid under mistake 280 [8.145] Contracts contaminated by mistake 286

Chapter 9: Unconscionable Dealing 295 [9.05] NATURE OF THE DOCTRINE 295

[9.05] Elements of the doctrine 295 [9.10] Focus on "procedura!" rather than "substantive" unconscionability .... 296 [9.15] Unconscionable dealing distinguished from undue influence 296

[9.25] SPECIAL DISADVANTAGE 297 [9.25] Nature of "special" disadvantage 297 [9.30] Factors indicating special disadvantage 298

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[9.80] KNOWLEDGE OF SPECIAL DISADVANTAGE 306 [9.85] Statements of weaker party revealing misunderstanding 307 [9.90] Knowledge of improvidence of transaction 308 [9.100] Knowledge stemming from longstanding relationship 308 [9.105] Knowledge of relationship between guarantor and debtor 309

[9.115] EXPLOITATION OF SPECIAL DISADVANTAGE 310 [9.115] Protection by independent advice 310 [9.120] Need for proof of subjective intention to exploit? 311

[9.150] DEFENCES 315 [9.155] REMEDIES 316 [9.160] STATUTORY INITIATIVES 316

[9.165] Australian Consumer Law, Pt 2-2 317

Chapter 10: Estoppel 325 [10.10] COMMON LAW ESTOPPEL 325

[10.10] Estoppel by deed (or estoppel in writing) 325 [10.15] Estoppel by judgment (or estoppel by record) 325 [10.35] Estoppel by conduct 327

[10.50] EQUITABLE ESTOPPEL 329 [10.50] Distinctions between common law and equitable estoppel

by conduct 329 [10.55] Forms of estoppel by conduct in equity 330 [10.80] Attempts to fuse estoppel by conduct into a Substantive doctrine 333

[10.105] REPRESENTATION 336 [10.110] Clarity of the representation 336 [10.140] Assumptions are not restricted to factual matters 341 [10.145] Conduct or dealings as a representation 342 [10.155] Silence as a representation 343

[10.160] RELIANCE 343 [10.165] Reliance must be reasonable 344 [10.200] Written contract inconsistent with extra-contractual

representations 348 [10.220] DETRIMENT 350

[10.220] Rationale 350 [10.230] Calculation of detriment 351 [10.270] Remedies to rectify detriment 359 [10.275] Detriment compensated or remedied by other means 360 [10.290] Opportunities foregone as detriment 362 [10.300] Emotional distress as detriment 363 [10.305] Detriment sustained by third parties 364

[10.310] UNCONSCIONABILITY 364 [10.310] Role of unconscionability 364 [10.315] Parameters of unconscionable conduct 366

[10.355] ESTOPPEL AND THIRD PARTIES 371 [10.360] ESTOPPEL AND STATUTE 372

[10.360] Inconsistency between estoppel and Statute 372 [10.395] Estoppel and the discretion of statutory authorities 376

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Chapter 11: Relief Against Forfeiture 379 [11.05] BASIS FOR RELIEF AGAINST FORFEITURE 379

[11.05] Unconscionable conduct 379 [11.10] Proprietary rights in applicant 380

[11.15] FORFEITURE AND CONTRACTS FOR THE SALE OF LAND 381 [11.15] Scope of Jurisdiction 381 [11.20] Forfeiture of payments made under a contract of sale 382 [11.25] Forfeiture of other interests under a contract of sale 383 [11.50] Forfeiture of moneys paid as a deposit 387

[11.85] FORFEITURE AND CONTRACTS FOR THE LEASE OF LAND 394 [11.90] Relief against forfeiture for breach of covenant to pay rent 395 [11.105] Relief against forfeiture for breach of covenants other than

to pay rent 397 [11.125] NATURE OF RELIEF AGAINST FORFEITURE 401

[11.125] Forms of relief 401 [11.135] Standing to seek relief 402

PART IV: UNFAIR OUTCOMES

Chapter 12: Part Performance 407 [12.05] DOCTRINE OF PART PERFORMANCE 407

[12.05] Relationship to statutory writing requirements 407 [12.15] Historically strict approach 408 [12.20] Loosening of the strict approach in England 409 [12.25] Current legal position — confluence with constructive

trusts, estoppel and Statute? 410 [12.45] EVIDENCE OF PART PERFORMANCE 412

[12.45] What constitutes relevant evidence 412 [12.60] Taking possession 414 [12.80] Payment of money 416

Chapter 13: Penalty Clauses 419 [13.05] BACKDROP AND CONTEXT 419 [13.20] FOUNDATION FOR RELIEF 420 [13.55] DISTINGUISHED FROM RELIEF AGAINST FORFEITURE 426 [13.60] DEALINGS OUTSIDE THE PENALTY NET 426

[13.60] Legitimate deposits 426 [13.65] Acceleration clauses 427 [13.70] Grants of indulgence 427

[13.80] TRIGGERING EVENT NOT CONFINED TO BREACH OF CONTRACT 428

[13.95] ACTION FOR DAMAGES IF PENALTY UNENFORCEABLE 431

Chapter 14: Subrogation, Contribution and Marshalling 433 [14.05] SUBROGATION 433

[14.05] The nature of Subrogation 433

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[14.30] Insured and insurer 436 [14.70] Principal and surety 441 [14.85] Debtor and creditor 443

[14.125] CONTRIBUTION 449 [14.125] Nature of contribution 449 [14.145] Measure of contribution 453 [14.170] Principal areas of Operation 457 [14.180] Contribution between sureties 458 [14.190] Contribution between insurers 459

[14.215] MARSHALLING 463 [14.215] Nature and purpose of marshalling 463 [14.240] Circumstances where marshalling is not available 465

Chapter 15: Deceased Estates 467 [15.05] SATISFACTION IN EQUITY 467

[15.10] Presumption as between testators and creditors 467 [15.40] Presumption in respect of persons in loco parentis 470

[15.55] EQUITABLE ADEMPTION 471 [15.55] Nature of equitable ademption 471 [15.65] Presumption of ademption 472 [15.80] Subsequent advance by parent (or person in loco parentis) 474 [15.95] Subsequent advance for a specific purpose 476

[15.100] ELECTION IN EQUITY 478 [15.100] Nature of election in equity 478 [15.105] Dual gifts 478 [15.120] Mutual obligations 481

PART V: TRUSTS

Chapter 16: Nature of A Trust 485 [16.05] DEFINITION AND CHARACTERISTICS 485 [16.15] CLASSIFICATION OF TRUSTS 486

[16.15] Express trusts 486 [16.20] Non-express trusts 488

[16.25] HISTORY OF THE TRUST 488 [16.25] The "use" 488 [16.40] Movement to the modern trust 490

[16.45] MODERN FUNCTIONS OF TRUSTS 490 [16.50] TRUSTS AND OTHER LEGAL RELATIONSHIPS 492

[16.55] Trust and bailment 492 [16.90] Trust and agency 497 [16.110] Trust and debt 498 [16.120] Trust and contract 500 [16.150] Trust, condition, charge and equitable personal Obligation 504 [16.175] Trusts and powers 506 [16.195] Trustee and executor 510

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Chapter 17: The Requisite Certainties 513 [17.10] CERTAINTY OF INTENTION 513

[17.15] Process of construction 513 [17.25] Admissibility of extrinsic evidence 516 [17.40] Intention stemming from Statute 518 [17.45] Inferring an Intention to create a trust 518

[17.60] CERTAINTY OF SUBJECT MATTER 520 [17.65] Nature of the property 521 [17.80] Quantum of interest 522

[17.95] CERTAINTY OF OBJECT 524 [17.95] "Beneficiary principle" 524 [17.100] Application of the beneficiary principle to fixed trusts 525 [17.115] Application of the beneficiary principle to discretionary trusts 526 [17.140] Purpose trusts 529 [17.170] Gifts to unincorporated associations 534

Chapter 18: Formalities and Complete Constitution 539 [18.05] FORMALITIES FOR ESTABLISHING AN INTER VIVOS TRUST 539

[18.05] Statutory writing requirements 539 [18.15] Enforcement of trust where formalities not fulfilled 542

[18.40] FORMALITIES FOR ESTABLISHING A TESTAMENTARY TRUST 546 [18.40] Formality requirements for a valid will 546 [18.45] Secret trusts 547

[18.90] COMPLETE CONSTITUTION OF TRUSTS 552 [18.90] Complete Constitution by füll legal transfer of trust property 552 [18.110] Enforceability of an incompletely constituted trust by

way of contract 557 [18.125] Exceptions to the rule that equity will not assist a volunteer 558

Chapter 19: Legality of Trusts 563 [19.05] FORMS OF ILLEGALITY 563

[19.10] Public policy illegality 563 [19.15] Statutory illegality 564

[19.20] TRUSTS FOR ILLEGAL PURPOSES 564 [19.30] Disclosure of illegal purpose 565 [19.55] Doctrine of locus poenitentiae —carrying out the illegal purpose 569

[19.60] TRUSTS THAT DISTURB THE SANCTITY OF MARRIAGE OR THE FAMILY 570

[19.75] TRUSTS IN RESTRAINT OF ALIENATION OF PROPERTY 572 [19.75] Conditional dispositions and deprivation clauses 572 [19.80] Trusts that infringe the rule against perpetuities 574 [19.95] Rule against indestructibility 577

[19.100] TRUSTS TO AVOID CREDITORS 577 [19.105] Setting aside where settlor is a natural person 578 [19.135] Setting aside where settlor is a Company 581 [19.140] Voidable dispositions outside of insolvency 583

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[19.150] TRUSTS TO EVADE TAXATION 584 [19.155] FAMILY COURT POWERS TO SET ASIDE FAMILY TRUSTS 586

[19.155] Setting aside dispositions 586 [19.170] Setting aside marriage Settlements 588

Chapter 20: Beneficiaries 591 [20.10] RIGHTS OF BENEFICIARIES 591

[20.10] Beneficiaries'rights generally 591 [20.30] Beneficiaries' access to trust Information 593 [20.75] Beneficiaries' right to disclaim 603

[20.95] NATURE OF BENEFICIARIES' INTERESTS UNDER A TRUST 606 [20.100] Unit trusts 606 [20.120] Discretionary trusts 609 [20.155] Default beneficiaries 615

Chapter 21: Trustees 617 [21.05] WHO MAY ACT AS TRUSTEE 617

[21.05] Capacity to act as trustee 617 [21.10] Company as trustee 618 [21.15] Statutory trustee companies 618 [21.20] Public trustee 619 [21.25] Advisory trustees 619 [21.30] Custodian trustees 620 [21.45] Bare trustees 621

[21.50] APPOINTMENT OF TRUSTEES 622 [21.55] Appointment pursuant to the trust instrument 622 [21.60] Appointment under statutory power 623 [21.65] Appointment by the court 624 [21.85] Number of trustees 628

[21.90] DISCLAIMER BY TRUSTEE 628 [21.95] RETIREMENT OF TRUSTEES 629 [21.100] REMOVAL OF TRUSTEES 630

[21.105] Removal by the court —welfare of the beneficiaries 630 [21.130] Costs of a proceeding for removal 634

[21.135] DEATH OF TRUSTEE 634 [21.140] ORDERS VESTING TRUST PROPERTY IN NEW TRUSTEES 635

Chapter 22: Duties of Trustees 637 [22.05] NATURE OF DUTIES 637

[22.10] Initial duties 637 [22.15] Fundamental duty to obey the terms of the trust 637 [22.20] Standard of care 638

[22.30] DUTY TO ACCOUNT 639 [22.40] DUTY TO ADMINISTER THE TRUST PERSONALLY 640

[22.40] Fettering discretion 640 [22.45] Duty not to delegate and its exceptions 641

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[22.50] Engagement of agents by trustees 642 [22.65] Unanimity in trustee decision-making 644

[22.70] FIDUCIARY DUTIES 645 [22.75] Trustees' remuneration 645 [22.95] Purchase of trust property by trustee ("purchase rule" or

"self-dealing rule") 648 [22.115] Purchase of a beneficiary's interest ("fair dealing rule") 651

[22.120] DUTY TO ACT IMPARTIALLY 651 [22.120] Nature of the duty 651 [22.130] Apportionment required by the duty of impartiality 652 [22.155] Residuary personalty of a wasting, hazardous or

reversionary nature 654 [22.160] Allocation of revenue and costs 655

[22.175] DUTY TO INVEST 656 [22.180] Investments authorised by the trust instrument 657 [22.185] Investments authorised by Statute 658 [22.200] Investments authorised by the court pursuant to its

"expediency" Jurisdiction 660 [22.205] Investment for the financial advantage to the trust 660

[22.225] DUTY TO PAY CORRECT BENEFICIARIES 663 [22.225] Duty of trustee in the event of overpayment 663 [22.230] Action by underpaid beneficiary 664

Chapter 23: Powers and Rights of Trustees 665 [23.05] POWERS OF TRUSTEES 665

[23.10] Sources of trustees' powers 665 [23.30] Exercise of trustees' discretion 667 [23.80] Powers of sale 674 [23.115] Powers of maintenance and advancement 677

[23.120] RIGHTS OF TRUSTEES 679 [23.120] Right to indemnity (and exoneration) 679 [23.160] Right to contribution from co-trustees 687 [23.165] Right to impound the interest of a beneficiary 688 [23.170] Right to seek advice and directions from the court 688

Chapter 24: Breach of Trust 695 [24.10] STANDING TO SUE 695

[24.10] Identity of persons with Standing 695 [24.15] Beneficiaries' Standing to sue third parties 696

[24.25] REMEDIES FOR BREACH OF TRUST 698 [24.30] Compensation 698 [24.60] Interest 702 [24.75] Account of profits 704 [24.95] Liability for co-trustee's breaches of trust — "wilful default" 706 [24.105] Account on the basis of wilful default 708

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[24.110] Options apart from action for breach of trust 708 [24.130] Personal action against third-party recipients of trust

property —Re Diplock 711 [24.140] DEFENCES TO BREACH OF TRUST 713

[24.140] Trustee exemption clauses 713 [24.160] Consent, acquiescence or release by the beneficiaries 716 [24.175] Delay 718 [24.200] Court's statutory power to excuse breach 721

Chapter 25: Variation, Resettlement and Termination of Trusts 725 [25.05] VARIATION OF TRUST 725

[25.10] Power of Variation in the trust Instrument 725 [25.25] Inherent Jurisdiction of the court to vary trusts 727 [25.30] Variation by the court under its "expediency" Jurisdiction 728 [25.60] Variation by the court on behalf of infants, unborn and

incompetent persons 735 [25.80] Western Australia —statutory Jurisdiction to vary the

quantum paid to a beneficiary 738 [25.85] RESETTLEMENT OF TRUSTS 738

[25.90] Sources of the power to resettle a trust 738 [25.105] Resettlement for revenue law purposes 740

[25.120] TERMINATION OF TRUST 741 [25.125] Termination by revocation 742 [25.135] Termination by beneficiaries 743 [25.155] Termination by distribution of trust property 746

Chapter 26: Resulting Trusts 749 [26.05] NATURE OF THE RESULTING TRUST 749

[26.05] Definition and terminology 749 [26.10] "Institutional" nature of the resulting trust 750

[26.15] FAILURE TO EXHAUST BENEFICIAL INTEREST 751 [26.20] Failure of express trust 751 [26.25] Failure to set out the trust or disclose the entire beneficial interest 751 [26.30] Property conveyed on trust for a specific purpose that fails 751 [26.35] Property conveyed on trust for purposes exceeds that required 752 [26.40] Resulting trust over stolen property 753

[26.45] RESULTING TRUSTS FORM CONTRIBUTIONS TO PROPERTY 753 [26.45] Circumstances giving rise to the presumption of resulting trust 753 [26.55] Voluntary transfer Situation 755 [26.60] Purchase money Situation 755 [26.90] Constructive trust relief 760

[26.95] DISPLACING THE PRESUMPTION BY CONTRARY EVIDENCE 760 [26.100] Relevant evidence of Intention 760 [26.110] Relevant evidence in rebuttal 762

[26.120] PRESUMPTION OF ADVANCEMENT 763 [26.120] Nature and Operation 763 [26.145] Rebuttal of the presumption of advancement 768

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[26.155] FUTURE OF THE PRESUMPTIONS 770

Chapter 27: Trusts for Commercial Purposes 773 [27.10] TRUSTS AS VEHICLES TO CONDUCT BUSINESS 773 [27.20] INSOLVENCY AND TRUSTS 775

[27.25] Liability on insolvency of trustee 775 [27.65] Property given for a specific purpose — trust or debt? 782 [27.75] Property given for a specific purpose — co-existence

of loan and trust ("Quistclose Trust") 784 [27.110] Insolvency of beneficiary 793

[27.125] TAXATION OF TRUSTS 795 [27.130] Scheine of trust taxation 795 [27.185] Capital gains tax and trusts 802 [27.200] Taxation of minors' income: Part III, Division 6AA 803

Chapter 28: Trusts for Investment 805 [28.05] BACKGROUND 805

[28.10] Superannuation 805 [28.15] Managed Investments 806

[28.20] STATUTORY REGULATION OF SUPERANNUATION 806 [28.25] MySuper 807 [28.30] Regulators 808 [28.35] Regulated entities 809 [28.40] Compliance 810 [28.45] Financial Services regime 810

[28.50] SUPERANNUATION TRUSTS 810 [28.55] Provisions of a superannuation fund deed 811 [28.60] Trustees 812 [28.75] Duties of trustees and directors 814 [28.105] Trust property 821 [28.130] Beneficiaries 824

[28.145] SUPERANNUATION TRUSTS AND THE CONTRACT OF EMPLOYMENT ... 826 [28.150] Construction of trust documents 826 [28.155] Employer's implied Obligation of trust and confidence 828

[28.160] OTHER TRUST RELATED SUPERANNUATION ISSUES 829 [28.160] Exercise of discretion and the formation of opinions 829 [28.170] Amendment and rectification of trust deeds 831 [28.190] Surpluses 833 [28.210] Conflicts of interest 836 [28.220] Duty of impartiality 838

[28.225] DISPUTE RESOLUTION IN SUPERANNUATION TRUSTS 838 [28.230] Internal review 838 [28.235] Externa! review: SCT (and forthcoming Australian Financial

Complaints Authority) 838 [28.240] MANAGED INVESTMENT SCHEMES 840

[28.240] Meaning of "managed Investment scheme" 840

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[28.245] Responsible entity 841 [28.250] Duties of the responsible entity 842 [28.255] Scheine Constitution 842 [28.260] Other Investor protection avenues 843

Chapter 29: Charitable Trusts 845 [29.05] NATURE OF A CHARITABLE TRUST 845

[29.05] Purpose trust 845 [29.10] Differences between private and charitable trusts 845 [29.30] Meaning of "charitable" at law 847

[29.55] PUBLIC BENEFIT REQUIREMENT 852 [29.60] The "public" requirement 852 [29.90] The "benefit" requirement 858

[29.110] RELIEF OF THE POOR, AGED AND IMPOTENT 862 [29.115] Relief of poverty 863 [29.125] Relief of the aged 864 [29.130] Relief of impotence 865

[29.140] ADVANCEMENT OF EDUCATION 866 [29.145] Valid educational purposes 866 [29.155] Public benefit in educational purposes 869 [29.160] The "benefit" element 870

[29.165] ADVANCEMENT OF RELIGION 871 [29.165] Religious purposes 871 [29.190] Advancing religion 874 [29.195] Public benefit in religious purposes 875

[29.210] OTHER PURPOSES BENEFICIAL TO THE COMMUNITY 877 [29.215] Two-stage analogy approach 877 [29.220] Protection of animals 878 [29.225] Locality cases 879 [29.230] Preservation or protection of the environment 880 [29.235] Promotion of industry and commerce 880 [29.240] Relief of distress 881 [29.245] Promotion of safety and protection of the country 882 [29.250] Assistance for Immigration and emigration 883 [29.255] Recreation and sport 884

[29.275] MIXED CHARITABLE AND NON-CHARITABLE PURPOSES 888 [29.275] Requirement that a trust be exclusively charitable 888 [29.280] Gifts for the purposes of associations 888 [29.290] Alternative and cumulative expressions 891 [29.295] Saving legislation 892

[29.310] CY-PRES SCHEMES 894 [29.310] Impossibility, impracticability or illegality 894 [29.315] "Initial" failure 894 [29.320] Non-existent institutions 896 [29.345] Cy-pres and public appeals 898

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Table of Contents

[29.355] Statutory cy-pres 899 [29.375] Power to settle cy-pres schemes 902

[29.380] ADMINISTRATIVE SCHEMES 903

PART VI: Equitable Defences

Chapter 30: Equitable Defences 907 [30.10] DELAY 907

[30.10] Delay and equitable relief 907 [30.25] Relationsbip between laches and acquiescence 910 [30.35] Laches and limitation legislation 911 [30.45] Nature of the claim 913 [30.75] Subject matter of the claim 916 [30.80] Identity of the party seeking to rely on the defence 917

[30.85] SET-OFF 917 [30.85] Nature of set-off 917 [30.95] Legal set-off 918 [30.105] Equitable set-off 919

[30.140] WAIVER IN EQUITY 924 [30.145] Release 925 [30.160] Estoppel 926

[30.170] UNCLEAN HANDS 928 [30.170] Nature of and limitations on the defence 928 [30.180] Case illustrations 930

PART VII: EQUITABLE REMEOIES

Chapter 31: Injunctions 935 [31.05] GENERAL PRINCIPLES 935

[31.05] Nature and Jurisdiction 935 [31.10] Classification 936 [31.15] Effect of non-compliance 936 [31.20] Standing to seek an injunction 937 [31.40] Scope of injunctive relief 941 [31.50] Considerations relevant to the exercise of the court's discretion 942 [31.75] Injunctions in criminal law 945 [31.80] Ex parte applications 946

[31.90] INTERLOCUTORY INJUNCTIONS 948 [31.90] Nature of interlocutory injunctions 948 [31.95] Serious question to he tried / prima facie test 949 [31.105] Damages not an adequate remedy (irreparable harm) 951 [31.125] Balance of convenience 953 [31.175] Interlocutory injunctions to prevent alleged defamation 962 [31.185] Appellate review of interlocutory determinations 966

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[31.190] QUIA TIMET INJUNCTIONS 966 [31.195] ANTI-SUIT INJUNCTIONS 967

Chapter 32: Mareva and Anton Piller Orders 969 [32.05] MAREVA ORDERS 969

[32.05] Natura and jurisdiction 969 [32.40] Preconditions to Mareva relief 973 [32.75] Scope and Variation of Mareva Orders 978 [32.90] Post-judgment Mareva Orders 980 [32.100] Mareva Orders and third parties 981 [32.110] Extra-jurisdictional and worldwide Mareva Orders 984 [32.120] Orders in aid of Mareva relief ("ancillary Orders") 986 [32.135] Abuses of process in seeking Mareva relief 988

[32.140] ANTON PILLER ORDERS 989 [32.145] The Anton Piller case 990 [32.150] Nature of Anton Piller relief 990 [32.155] Preconditions to Anton Piller relief 991 [32.160] Application for and execution of Anton Piller Orders 992 [32.200] Principal uses of Anton Piller Orders 998

Chapter 33: Specific Performance 1001 [33.05] NATURE OF SPECIFIC PERFORMANCE 1001

[33.05] Definition 1001 [33.10] Basic requirements 1002

[33.20] SPECIFIC PERFORMANCE OF PARTICULAR CONTRACTS 1003 [33.20] Contracts for the sale of land 1003 [33.35] Building contracts 1006 [33.40] Repairing covenants in leases 1006 [33.45] Contracts for the sale of personalty 1007 [33.65] Contracts to pay or lend money 1010 [33.80] Contracts for personal Services 1011

[33.90] DEFENCES TO AN ACTION FOR SPECIFIC PERFORMANCE 1012 [33.90] Defences arising from the nature of the contract 1012 [33.130] Defences arising from the conduct of the parties 1017

Chapter 34: Compensation, Damages and Account of Profits 1025 [34.05] EQUITABLE COMPENSATION 1025

[34.05] Nature of equitable compensation 1025 [34.20] Relevance of causation 1027 [34.55] Flexible nature of equitable compensation 1032 [34.60] Award of interest 1033

[34.65] EQUITABLE DAMAGES 1033 [34.70] Prerequisites for the award of equitable damages 1034 [34.105] Assessment of equitable damages 1038 [34.125] Exemplary and aggravated damages 1041

[34.140] ACCOUNT OF PROFITS 1045 [34.140] Nature of an account 1045

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[34.155] Jurisdiction 1047 [34.160] Calculation of profit 1048

Chapter 35: Rescission 1051 [35.05] NATURE OF RESCISSION 1051

[35.10] Rescission at common law 1051 [35.15] Rescission in equity 1052 [35.40] Need for assistance of the court 1055

[35.45] GROUNDS FOR RESCISSION 1055 [35.50] Misrepresentation 1055 [35.65] Breach of fiduciary duty 1058 [35.70] Mistake 1058

[35.75] BARS TO RESCISSION 1059 [35.75] Third party interests 1059 [35.85] Affirmation 1059 [35.100] Delay 1062 [35.105] Express exclusion of the right to rescind 1062 [35.110] Executed contract 1062

Chapter 36: Receivership 1065 [36.05] NATURE OF RECEIVERSHIP 1065 [36.20] OUT-OF-COURT ('"PRIVATE") APPOINTMENT 1066

[36.25] Agency relationship 1067 [36.45] Duties of privately-appointed receivers 1070

[36.80] APPOINTMENT BY THE COURT 1076 [36.85] Officer of the court 1076 [36.90] Jurisdiction not to be exercised liberally 1077 [36.100] Standing 1078 [36.105] Pre-existing contracts of the debtor 1078 [36.110] Undertaking as to damages 1079 [36.115] Ex parte appointment 1079 [36.125] Indemnity for remuneration and expenses 1080 [36.130] Receivers and equitable execution 1081

[36.150] STATUTE GOVERNING RECEIVERS 1083 [36.150] Corporations Act 2001 1083 [36.165] Receivers appointed under property legislation 1085

Chapter 37: Dedarations, Rectification, Specific Restitution and Delivery up 1087

[37.05] DECLARATIONS 1087 [37.05] Source of Jurisdiction to grant declaratory relief 1087 [37.10] Use of declaratory relief 1088 [37.15] Discretion to grant declaratory relief 1088 [37.20] Inconsistency with alternative remedy or Statute 1090 [37.30] Theoretical or academic issues 1091 [37.40] Standing 1092 [37.50] No practica! relevance or Utility 1094

xxiii


[37.65] RECTIFICATION 1095 [37.65] Nature of rectification 1095 [37.80] Instruments equity will not rectify 1098 [37.90] Rectification for common mistake 1099 [37.125] Rectification for unilateral mistake 1105

[37.140] SPECIFIC RESTITUTION 1109 [37.155] DELIVERY UP AND CANCELLATION OF DOCUMENTS 1110

[37.155] Nature of Jurisdiction 1110 [37.165] Terms of relief 1111

Chapter 38: Constructive Trusts 1115 [38.05] DEFINITION AND CLASSIFICATION 1115

[38.10] Institutional constructive trusts 1115 [38.15] "Remedial" constructive trusts 1117 [38.20] Constructive trusts distinguished from other trusts 1117

[38.25] INSTITUTIONAL CONSTRUCTIVE TRUSTS 1118 [38.25] Accountability as principal for breach of fiduciary duty 1118 [38.55] Accountability of persons who act as trustees without

appointment 1125 [38.65] Liability as an "accessory" to a fiduciary or trust breach 1126 [38.100] Accountability as a recipient of trust property 1135 [38.130] Constructive trusts arising out of agreements to deal with

property 1141 [38.165] REMEDIAL CONSTRUCTIVE TRUSTS 1147

[38.165] Nature and incidents 1147 [38.175] General principle: unconscionable denial of or assertion

to beneficial interest in property 1149 [38.215] Common intention constructive trust 1155 [38.250] Backdating the remedial constructive trust 1162 [38.270] Alternative remedies 1168 [38.275] Charitable trust as remedy? 1169

Chapter 39: Tracing 1171 [39.05] NATURE OF TRACING 1171

[39.10] Tracing at common law 1171 [39.15] Tracing in equity 1172 [39.50] Coalescence between common law and equitable tracing 1176

[39.55] PROCESSOF TRACING 1177 [39.55] Mixing of trust and non-trust property: the tracing step 1177 [39.85] Mixing of property from more than one trust: the

"allocation step" 1183

Index 1189

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equity and trusts in australia c e dal pont professor

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